What is subrogation and how does it affect my settlement?

Subrogation is the legal right of an insurance company or other payer (such as your health insurer or Medicare) to be reimbursed from your settlement for payments they made on your behalf related to the injury. For example, if your health insurance paid $20,000 in medical bills for injuries caused by someone else's negligence, your health insurer can assert a subrogation lien against your settlement and recover that amount once you are compensated by the at-fault party. Medicaid and Medicare have particularly strong subrogation rights under federal law. Workers' compensation insurers also typically have subrogation rights if you recover from a third party. This means your "net" recovery after satisfying liens may be less than your gross settlement. An experienced attorney can often negotiate lien reductions — particularly with private health insurers and Medicaid — which directly increases your take-home amount.